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Warren Buffett has long ago become far more than the world's richest man or its greatest living investor. He's an institution and as such can get away with words and actions most of us mere mortals, cubicle drones and self professed intellectuals can only think but never say out loud.

One such example seems to be Buffett's latest claim that U.S. debt merits a "quadruple A" rating. Though I have disagreed with lots of things the Oracle of Omaha has said over the past few years, I must say I am fully on board with this one. If not all together in logic, then certainly in spirit.

Even though this past week's events have made many nervous and rightfully so, the status quo really has not changed much in the world. Yes, a U.S. debt downgrade is a symbolic victory for nouveau socialists and America haters. It has rightfully and righteously shined the inspectorial flashlight on Washington and its Left-Right coalition of leather chair loving incompetents breathing hard as they drag their feet to the next election's finish line. But it has not changed the power structure of world economics and has quite possibly swung the pendulum decidedly back in America's favor.

As I myself begin to age, I start to see that wisdom and smarts have little to do with one another. Mere intelligence or the ability to interpret data can't hold a handle to having seen it all before. Though Mr. Buffett does not spend his days explaining his positions in dissected detail, he does know a hell of a lot more than I or you do. As fun as it is to be the know-it-all scamp on the come up, it is also could to STFU and listen to someone who has seen it, been there and done it a hundred times before you were a twinkle in your daddy's eye.

For those who understand the tortured vanity of propping up the planet and being questioned for it, Buffett's rationale makes perfect sense. There won't be any revenge attacks against S&P for disgracing America's honor but I do believe the downgrade will eventually serve as the greatest catalyst in the recovery. Something that I, now for the first time, believe is on the horizon.

How about yourselves?

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Comments (22)

  • jdog112's picture

    Interesting. You're right of course, Buffet knows a hell of a lot more than I do. But a credit rating serves a purpose, and I don't think that any rating agency should be looking at any newly issued American debt and rating it AAA. I believe that day came and went a while ago. I'm with you in spirit. But at the end of the day we have $1.5T budget deficits, a slowly decaying dollar, an extensively loose monetary policy horizon, an affinity for military action across the globe, and a country that's become increasingly reliant on government and cheap money. Wait until the 30 year bull market in bonds "officially" ends, eventually this country will be paying $1T in interest alone one day, that's incredible. I hope the Oracle's right, as usual.

  • bortz911's picture

    "If not all together in logic, then certainly in spirit." Can you elaborate on this? Everything else you wrote I could nod in agreement with, but here you seem to be condoning the traditional mindless, team-oriented American optimism.

    Also, MIdas, I just can't take it anymore - I mean this in the nicest, most constructive way possible: http://www.google.com/search?aq=f&sourceid=chrome&...

  • Chelseawon3nil's picture

    Although all evidence points to the contrary, Buffet may be trying to bolster confidence in the markets with his optimism, knowing that people will trust his position given his legendary reputation. Otherwise, when looking at America's situation objectively and given that Buffet doesn't substantiate his reasoning, the downgrade seems rational.

    "I want what all men want, I just want it more." -Achilles

  • In reply to bortz911
    Midas Mulligan Magoo's picture

    bortz911:
    "If not all together in logic, then certainly in spirit." Can you elaborate on this? Everything else you wrote I could nod in agreement with, but here you seem to be condoning the traditional mindless, team-oriented American optimism.

    Also, MIdas, I just can't take it anymore - I mean this in the nicest, most constructive way possible: http://www.google.com/search?aq=f&sourceid=chrome&...

    Buffett doesn't get in depth about why he holds his opinion, he just issues it matter-of-factly. As a result, I can't agree with his rationale on an analytical level, since he's not analyzing or addressing any data. I do, however, agree with the underlying point that the USD is very secure and that current fear mongering is overblown and politicized. The meaning of "quadruple A" (as I interpret it) is "still better than anything else out there, and as a result, safe and sound".

    The reality is that for a bevy of reasons there can (currently, and for a good while into the future) be no reserve currency other than the Dollar. Conversely, U.S. debt is still going to be a safe haven port for money flight from all over the globe. The reason that I engage in what you refer to American optimism is because I come into near daily contact with people from all over the globe from countries and economic spheres of interest which would be pretenders to the throne. Having seen how economic infrastructures look from the inside out in some of the places in question I have to laugh at all the America is dead talk.

    If the Dollar goes down, so does the global economy and my hunch is that for a guy like Warren who lived through a Depression, a World War, multiple Recessions and Stagflationerica...repeated experience trumps any new take on age old realities.

  • marcellus_wallace's picture

    He is talking his book. He loves to talk his book.

    You expect the greatest American investor of all time to say otherwise?

  • TNA's picture

    Ok, let's say America isn't the best. What country can be better? Apples to apples comparison. None of this tiny country in Europe shit. China and the USA are the only two real global powers. The USSR used to be the third. When you look at everything objectively, the USA is still a better place to be than China.

  • In reply to TNA
    leveredarb's picture

    ANT:
    Ok, let's say America isn't the best. What country can be better? Apples to apples comparison. None of this tiny country in Europe shit. China and the USA are the only two real global powers. The USSR used to be the third. When you look at everything objectively, the USA is still a better place to be than China.

    This is the dumbest thing I have ever read on WSO.
  • In reply to leveredarb
    wadtk's picture

    leveredarb:
    ANT:
    Ok, let's say America isn't the best. What country can be better? Apples to apples comparison. None of this tiny country in Europe shit. China and the USA are the only two real global powers. The USSR used to be the third. When you look at everything objectively, the USA is still a better place to be than China.

    This is the dumbest thing I have ever read on WSO.

    How? ANT is completely spot on.

  • In reply to TNA
    Massiveattack1987's picture

    ANT:
    Ok, let's say America isn't the best. What country can be better? Apples to apples comparison. None of this tiny country in Europe shit. China and the USA are the only two real global powers. The USSR used to be the third. When you look at everything objectively, the USA is still a better place to be than China.

    I trust US more than China, but I would never say that America is the best.

    What I exactly want to say is: ANT no good.

  • TNA's picture

    Comparing the US to Sweden is utter bullshit. Compare Sweden to Oregon or something. The united states is a global superpower. We are one of if not the most powerful agricultural nation in the world. We have the best universities and are the destination for the best of every nation. We also have super power problems.

    On and apples to apples basis, the USA is still the best. Maybe not if you enjoy total state control, rampant pollution and religious persecution.

  • In reply to bortz911
    UFOinsider's picture

    bortz911:
    condoning the traditional mindless, team-oriented American optimism.

    Is there something more useful in times of crisis?

    As for S&P, I see them as a bunch of fools who think they are "sticking it" to Obama and the downgrade just worsens the economic climate. I'm not sticking up for it....it's pretty bad, and I think that ultimately this just underscores how irrelevant the credit rating business stands to become. If S&P and others had done their jobs in the first place we wouldn't be in this mess, so I think the best thing they can do is shut up.

    Seriously, the bottom line is that they assign a value to the possibility of default: are they SERIOUSLY standing by the point that the US has any remote possibility of defaulting on its debt in the forseeable future?

    I'm not buying anything they're selling, and haven't for some time. This is a destructive effort based on a myopic understanding of the world. Long term, S&P's credibility will suffer because of this, and not the dollar's.

    Get busy living

  • In reply to wadtk
    djr's picture

    wadtk:
    leveredarb:
    ANT:
    Ok, let's say America isn't the best. What country can be better? Apples to apples comparison. None of this tiny country in Europe shit. China and the USA are the only two real global powers. The USSR used to be the third. When you look at everything objectively, the USA is still a better place to be than China.

    This is the dumbest thing I have ever read on WSO.

    How? ANT is completely spot on.

    He probably said it was dumb because you said 'objectively' when the statement couldn't be more subjective. Who thinks it's a better place to be? Who's point of view are you looking at? the investors? the average citizen? I bet Mao Zedong would think otherwise. The debate here is about credibility, not whats a better place to be.

    I'd seriously consider politics if I were you. You can go on sensational rants, love taking jabs at specific groups, firmly believe you are right and always know the right answer when you are usually wrong (at least in my opinion) and have a large following on WSO. You'd fit in right with the current congressman.

  • TNA's picture

    I am sure some people think Afghanistan is the shit. Objectively, when you consider size of a country, global power, opportunity, choice, freedom, security, etc I still think the USA wins.

    Comparing a country the size of one of our states, with a GDP a state, to the entire nation is inappropriate and wrong.

    When you make comparisons you need to put subjective thinking behind you. Sweden, Finland, Belgium are all great countries. They are not in the same league as the USA, China, Russia, etc. Maybe you can compare the European Union to the USA, which would be at least more fair than other comparisons. Even then the EU would be behind China when you look at economic growth and global power.

    If you think any country in Europe is a safer bet that the USA you are smoking crack. Europe has an aging and calcified work force and a completely anti immigrant stance. When you have negative birth rates and an aging population you need young immigrants. This is why the US continues to flourish.

    Europe has no military worth a shit which is perfectly fine right now. Just wait until commodities become more scarce, food becomes more scarce, what becomes more scarce. I'll tell you what, an aircraft carrier and the USMC is enough guarantee I need that the USA will have food.

    Look at what China is doing. They realize how precious and dwindling natural resources are. They also don't want to bump heads with the USA. So they invest and get contracts in unsavory nations while at the same time building up their navy (aka force projection). While China and the USA are carving up the world, Europe demilitarizes and basically rapes their operational capabilities for the sake of 2 months of vacation and retiring at 55.

    Credibility? The US has 3x the largest gold reserve of any nation. Plenty of fat to cut and a newfound willingness to cut. Unlike Europe, the USA is trying to move away from entitlements and nanny state behavior (thanks Tea Party) and can easily change course. Europe on the other hand has to bail out nation after nation or risk watching the Euro take a massive hit.

    China is second to the US simply because it is totalitarian. Freedom is an absolute good. China has far far less freedom than the US does. It is also primarily a developing nation. The majority of Chinese are dirt poor and it will take a long time for that country to have a living standard even close to what the US has. Please tell me how straight up facts can be subjective.

  • noname1001's picture

    The market will signal who still holds the top tier slot for economic bad-assery. Yields are down, treasury cds are down,show me a safer investment. S&P is gettin' they charlie sheen on. #winning!

    I have to return some video tapes.

  • In reply to Midas Mulligan Magoo
    UFOinsider's picture

    Midas Mulligan Magoo:
    Buffett doesn't get in depth about why he holds his opinion, he just issues it matter-of-factly. As a result, I can't agree with his rationale on an analytical level, since he's not analyzing or addressing any data. I do, however, agree with the underlying point that the USD is very secure and that current fear mongering is overblown and politicized. The meaning of "quadruple A" (as I interpret it) is "still better than anything else out there, and as a result, safe and sound".

    Does this make him some weird historical analogy to Morgan a century ago? Not so much the mechanics but more the function? He is infusing a sense of rock solid confidence in the American economy while people WHO SHOULD FUCKING KNOW BETTER are running around like a bunch of twats drumming up fear of a falling sky. Social realities are largely a function of self fulfilling prophesies, and the worst of the shitheads WANT the system to falter because
    A. They don't see a future for themselves in it, largely because they don't understand it and
    B. It's the perfect excuse to introduce a draconian worldview: they are trying to use fear to control the public

    Kudos to Buffet. It all ultimately comes down to an issue of confidence: is it worth my while to participate in the system? I say yes. Right now he's one of a few people holding their shit together, and nothing says leading by example than becoming the most wildly successful investor ever and then being the voice of reason while everyone else freaks out because they don't know what they're doing. And we're talking bright people here: shame on them for being asses, and shame on them MORE if they try and cop out with the ignorance excuse. If they don't know what they're doing, get out of politics.

    I'd write about the massive incompetence of our politicians: Dems, GOP, tea fairies, socialist sociopaths, libertarian assholes, and worthless independant centrists..............but I'd likely have a heart attack and I don't think it would solve anything anyway.

    <PUNCHING THE WALL...FUCK THIS>

    Get busy living

  • leveredarb's picture

    It was dumb because the most fundamentalist american on this entire forum stating that america is objectively better than any other country is the dumbest thing I have ever read.

    Also comparing two countries with vastly different size, cultural, political system, values and claiming an apples to apples comparison is of unprecedented stupidity.

    This is only crowned by claiming comparing america to any european country(which are much closer in terms of values, culture, political and legal framework) is an unfair comparison. You may want to consider that size wise the multiple china's population is relative to the US, is similar to the multiple US is to european countries.

    The sole aspect on which there is some remote similarity is the fact that china may be considered somewhat of a super power, but even here china hardly compares to the influence of the US.

    You may or not be right ANT, but your argument is so logically flawed that is likely is the dumbest thing ever posted on this website.

  • In reply to leveredarb
    UFOinsider's picture

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    Get busy living

  • cranium's picture